Employment Contract
Protect your Texas tax preparation firm with a customized employment contract. Includes at-will employment, PTIN compliance, GLBA data security, non-solicitation of 1099/
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Tax Preparation Firms in Texas are frequently sued when a former preparer leaves and takes client lists containing Social Security numbers and W-2 data to a competitor, triggering IRS Circular 230... Read more
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Tax Preparation Firms in Texas are frequently sued when a former preparer leaves and takes client lists containing Social Security numbers and W-2 data to a competitor, triggering IRS Circular 230 violations and Texas Business & Commerce Code identity-theft claims. A 2022 Houston firm paid $185,000 in penalties and settlements after an employee used client depreciation schedules and amended return notes to solicit former clients in direct violation of their unsigned agreement. Our Texas-specific employment contract for tax preparation firm in Texas locks down confidentiality of client tax data under the Gramm-Leach-Bliley Act, enforces non-solicitation clauses that meet the 'ancillary to an otherwise enforceable agreement' test of Tex. Bus. & Com. Code § 15.50, and clearly states at-will employment under Tex. Lab. Code § 21.051. It also spells out PTIN responsibilities, continuing education on IRC changes, and data-breach notification timelines required by Texas law. Without these tailored protections, your firm risks E&O liability, FTC enforcement actions, and loss of client trust that can destroy a seasonal tax practice overnight. Whether you are onboarding a new enrolled agent or a 1099 preparer, this contract keeps your Texas tax office compliant and competitive.
Beyond the standard employment contract sections, this template adds fields specific to Tax Preparation Firm:
An employment contract establishes a formal employment relationship between an employer and an employee, outlining the terms and conditions of employment, rights, obligations, and responsibilities of both parties. It provides legal protection and clarity, ensuring compliance with employment laws and minimizing the risk of misunderstandings and disputes.
Errors and Omissions in Tax Filing
Utilize detailed engagement letters with disclaimers, and ensure quality control processes in the preparation of returns to minimize mistakes.
Breach of Confidentiality
Implement and maintain Data Protection Policies, comply with GLBA requirements, and use confidentiality agreements to protect client data.
IRS Penalties for Non-compliance
Keep abreast of all tax law changes and continuously educate staff, include limitation of liability clauses in service agreements.
For this employment contract to be legally valid:
Common mistakes to avoid:
Internal Revenue Code (IRC)
Governs all federal tax-related activities including tax preparation. Tax preparers must comply with the rules and standards defined by the IRS under the IRC.
Enforced by Internal Revenue Service (IRS)
Treasury Department Circular 230
Sets forth regulations governing practice before the IRS, including the duties and restrictions relating to tax preparers and standards of competence.
Enforced by U.S. Department of the Treasury
Gramm-Leach-Bliley Act (GLBA)
Requires tax preparers to protect the privacy of consumer financial information, specifically ensuring safeguards for client data.
Enforced by Federal Trade Commission (FTC)
State Board of Accountancy Regulations
State-specific regulations which may require registration of tax preparation firms, especially if they offer CPA services.
Enforced by State Board of Accountancy
Recommended coverage: Errors and Omissions (E&O) Insurance · General Liability Insurance · Cyber Liability Insurance · Fidelity Bonds
The IRS requires every paid preparer to hold a valid Preparer Tax Identification Number (PTIN) under the Internal Revenue Code. Texas employment contracts must explicitly require employees to maintain their PTIN, complete annual continuing education, and comply with Treasury Department Circular 230 standards of competence and due diligence. Failure to include these obligations exposes the firm to IRS penalties and potential revocation of the firm's EFIN. Our contract ties PTIN compliance directly to continued at-will employment and grounds for immediate termination.
Yes, when properly drafted. Texas Business & Commerce Code § 15.50 requires non-compete and non-solicitation clauses to be ancillary to an otherwise enforceable agreement and reasonable in time, geography, and scope. Our employment contract for tax preparation firm in Texas limits the restriction to clients the employee personally prepared returns for in the preceding 24 months and to a 50-mile radius, satisfying the statute and recent Texas court decisions. This protects client lists containing sensitive 1099 and W-2 data without being overly broad.
The contract incorporates Gramm-Leach-Bliley Act (GLBA) safeguards and Texas Business & Commerce Code data-disposal and breach-notification requirements. Employees must use encrypted systems for client depreciation schedules, amended returns, and estimated-tax worksheets. Any breach must be reported to the firm within 24 hours so the firm can comply with state and IRS notification rules. These provisions reduce Errors & Omissions exposure and help avoid costly FTC or Texas Attorney General investigations.
Absolutely. The document expressly states that employment is at-will in accordance with Texas Labor Code and common law, allowing either party to terminate without cause upon the notice period defined. It avoids creating any implied contract for a definite term, which is a frequent pitfall for Texas tax firms that use outdated templates.
State laws affect what must be in this document. Pick your jurisdiction.
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